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Newsagency opportunities

Lessons from Take 5 and That’s Life

Take 5 and That’s Life are heroes of the high volume weekly magazines.  While circulation declines for each in the latest numbers out last week, their respective declines (-1.53% and -1.92% respectively) are a fraction of the declines of the higher profile weeklies.  I see Take 5 and That’s Life as bread and butter magazines for newsagencies.  They deliver loyal mid week traffic off of which smart newsagents build other sales.  We treat them well with co-location, active promotion and other support.  They return the favour with good numbers for us.

My special interest in Take 5 and That’s Life relates to loyalty.  I first noticed this when we introduced Australia’s first magazine loyalty program in my newsagency in 2004.  We still run the program today and Take 5 and That’s Life customers remain the most loyal to us and in the use of our magazine loyalty program.

The circulation numbers reinforce my interest in these titles.  They demonstrate a resilience which ought to be respected in this marketplace.

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magazines

Benchmark study results confirmed

When I published the latest newsagency sales benchmark study results last month several people contacted me questioning the results, especially for magazines.  They said the benchmark numbers for magazines seemed on the high side.  The details of the latest circulation audit numbers bear out the benchmark study results.

My interest in the newsagency sales benchmark is to provide newsagents with current trend data so that shop fit and other business decisions can be made with a more informed view of business in the channel.

The next phase of the study will look at basket data and compare the contents of newsagency shopping baskets in 2009 with what we saw in 2005.  Such analysis provides tremendous opportunities.

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magazines

Why we need fewer newspaper and magazine retailers

Newsagents are better retailers of magazines and newspapers than supermarkets and some other retailers.

Newsagents offer broader support of the category – more than good placement. We are less demanding when it comes to costs such as shelf space, marketing subsidies and other costs of business. We add value through a range of magazine related services like co-location, beacon branding, loyalty programs, category promotions and other initiatives.

I would like to see publishers respect the service newsagents provide by reducing their use of other retail outlets. Help us reinforce our position as magazine specialists. If developed professionally and executed co-operatively such a strategy would improve newsagency foot traffic and increase customer spend on magazines.

Publishers think that by making a product ubiquitous it is easier to purchase, more likely to be purchased. I’d suggest the opposite is true. People can think that they will have other opportunities to purchase a title and some end the week or month having not done that. Also, seeing a title everywhere may blind people to it – that’s what I wonder.

Reducing retail outlets gives us an opportunity to build healthier businesses around newspapers and magazines and, as a result, invest more in the category. The return for publishers would be greater effort from the specialists.

I am not about to lay out my plan here but I would note that today’s conditions offer an excellent opportunity to build magazine sales based on respect of magazine and newspaper specialists rather than driving competition through more outlets.

There are proactive newsagents keen for such an opportunity.

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magazines

Promoting the Combat Tanks Collection

combat_tanks.JPGThe Combat Tanks Collection partwork is generating good traffic.  The TV campaign running currently is having a positive impact.  We are promoting the title at the front of the shop to also get to people who have seen the ad but have forgotten to purchase it.  We are also pushing putaways for people likely to want to collect the series.

The Combat Tanks Collection is an excellent opportunity for newsagents as we have this exclusively.

Regulars here will know why I like partworks.  Partworks customers are more likely to purchase other items when visiting to collect an issue than a regular magazine customer.

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Newsagency opportunities

Wrapping paper behind the counter

wrap_counter.jpgIn our gift shops we have sheeted wrapping paper behind the counter.  It is attractive and commercially viable in this location.  Sheeted wrapping paper is possibly something that could work in newsagencies rather than the usual behind the counter product mix and clutter.

We change the paper to match fashion trends as well as for key seasons.  It is surprising the number of customers who present at the counter and purchase paper on impulse based on what they see on the wall behind.  Above the paper we have a selection of boxes which also sell well from this counter location.

Ideally, the wall behind is slatwall.  This provides good flexibility and allows for displaying sheeted paper as shown in the photo or other items from time to time.  Change is important given the frequency of visits by newsagency regulars.

If you have room behind your counter, consider this or something else different from what you have now.  I’d be surprised is it does not generate worthwhile business.

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Newsagency opportunities

Early magazine returns can be a self fulfilling prophecy

I have seen data which proves that some newsagents are returning some titles too soon in the on-sale period, thus driving sales on a downward spiral.

Newsagents I have spoken with say that publishers overloading them drives early returns.

Newsagent business data shows a different story. It shows, in the cases I have seen, that some newsagents returned stock less than half way through the on-sale and that they could have expected to sell at least two thirds of the stock they returned. Their early returns stopped them achieving sales their data history indicated would have been made.  Early returns of these specific titles for which I have seen data cost these newsagents money.

Early returns based on gut feel can drive a self fulfilling prophecy. The newsagent thinks they are oversupplied and that stock will not sell based on what is on the shelf. Without reference to data they send the stock back early. They don’t have the stock to sell. Sales fall. Eventually the title dies in that newsagency.

Newsagents need to take care when early returning – make sure you are not losing sales. Check your sales history for a title before you make the move. Understand when in the sales cycle you sell a title before removing it early.  Smart publishers provide access to data which helps newsagents – such as the data I was shown recently. I’d gladly put newsagents in touch with publishers who are proactive in this area if they are concerned about early returns.

Of course, magazine distributors can reduce early returns by supplying to achieve a 60% or better sell through for all titles and not just the top sellers. Newsagents who see a poor performing title have been known to hit back at this by early returning other titles.  I can understand this from a cash management perspective.  Magazine distributors often have only themselves to blame in such situations.

The other way publishers can reduce early returns is to supply 30 day stock.  By this I mean, eliminate stock we are to hold for longer than 30 days.  Many longer on-sale products are supplied in larger quantities to satisfy the selflife.  Split the delivery and reduce the cash-flow strain on newsagents.  There will be fewer early returns as a result.

Early returning because you have no space is a different story, one for another day because that is an industry problem.

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magazine distribution

Amazon launches Kindle DX

kindle_dx.jpgAmazon launched the Kindle DX reader yesterday in the US.  This new device is being touted by some newspapers as a device which could help save newspaper publishing.    Amazon said that three newspapers, The New York Times, The Boston Globe and The Washington Post, will offer the Kindle DX from mid this year at a reduced price to subscribers who sign up for long-term subscriptions.

The New York Observer quotes Arthur Sulzberger, publisher of The New York Times:

Mr. Sulzberger called the Times Company’s embrace of the Kindle DX “an important milestone in the convergence of print and digital.”

“We at the New York Times company are delighted to make use of the Kindle DX,” Mr. Sulzberger continued. “We know that the e-reader can offer the same satisfying experience [as the print edition].”

The Kindle is not currently available here as it operates through a wireless network and the Australian marketplace reportedly presents some challenges in this regard.

Looking at the US situation, newsstands and other newspaper vendors play no role in the new distribution model.  In a Kindle relationship, the publisher offers the subscription through Amazon.  Production costs beyond the first copy are nil. No wonder publishers see the Kindle DX and other e-reader type devices as crucial to their future business plans.

I would expect publishers to say that customers accessing newspapers through the Kindle are different to those purchasing print.  Film, TV and music producers said that too many years ago.  The iPod changed that.  Only time will tell whether the Kindle is the iPod of print and changes distribution forever.

In the meantime, my view is that no newsagent should sign up for a shop fit which includes purpose built newspaper or magazine fixtures.  These parts of our shops need to be able to be changed without any capital expenditure.  we have a tremendous opportunity here compared to our counterparts in the US, an opportunity to lead change.

PaidContent has good coverage of the launch of the DX.

The photo is from the Amazon website.

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Media disruption

Books and newspapers on your iPhone?

Apple who are set to launch a brand new touch screen, tablet type device in June that will be available with a 15″ screen, have been exploring the concept of delivering morning newspapers and books to the device in an easy to read format that eliminates the need to click through to separate pages on a web site.

Smart House has more on this story.  They say that Apple and Sony met with newspaper publishers in the US earlier this year to discuss this.

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Newsagency challenges

April numbers in newsagencies

We are reasonably happy with our April numbers:

  • Art: up 12%
  • Books: down 5% (off a great 2008)
  • Calendars: up 100%
  • Diaries: up 125%
  • Gifts: up 795% (off a low base)
  • Magazines: down 5%
  • Newspapers: down 6%
  • Ink: up 18%
  • Stationery: up 1%
  • Overall traffic: down 13%

It is good to see growth in categories with healthy margin.

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Newsagency opportunities

Newspapers no longer essential – Buffett

I have heard Warren Buffett referred to by newspaper publishers as supporting of the print medium.  In at least two presentations over the last few years I have heard that Buffett and his business partner, Charlie Munger, read five newspapers a day.  This was presented as support for the future of newspapers. Newspaper publishers are unlikely to refer to Buffett again thanks to comments he made a few days ago at the annual shareholders meeting of his Berkshire Hathaway business where he told his shareholders that US newspapers face “unending losses” and that they are no longer “essential”.

What does this mean for us here in Australia?  Publishers will tell us it is business as usual.  They would want us to ignore what is happening in the US.  Some newsagents will believe that.  My view is that the crash of US newspapers we are witnessing this year is an early warning of what will happen here in the future.  Our excellent home delivery system is delaying the impact because small business newsagents carry the more of the high cost of distribution than delivery contractors in the US.  We are also insulated because debt levels of publishers are different here – although Fairfax does appear to be more challenged in this area than News.

Rather than focusing on the gloomy news, we need to embrace the opportunity.

Newsagents need to make business decisions with the full knowledge of what is happening to newspapers in the US.  We cannot rely on newspaper generated traffic to our businesses forever, not even for five years.  We need to build new traffic urgently.  In-store, we need to be flexible in our offer, expand our range and focus on categories which generate their own traffic and do not rely on newspaper traffic to drive sales.

While it is sad to see US newspapers crash, we have a once in a lifetime opportunity to reengineer our businesses before we loose newspaper traffic here.  We need to focus on that opportunity and embrace it for our own future.

UPDATE: Fox Business has the full quotes re newspapers.

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Newsagency challenges

Stationery sales down in the US

water_pens.jpgFurther to my post on Thursday, US stationery group Office Max overnight reported a 17% fall in sales – within one point of the fall experienced by Office Depot.

I suspect that the majors in Australia in stationery are experiencing similar falls, Officeworks, Corporate Express and others.   This is where newsagents can benefit.  While people will not go to Officeworks to do a $500 stationery shop, they will come to a newsagency for the incidental items and, hopefully, pick up other stationery items.  Whether they do, however, is entirely up to us.

We maximise the stationery opportunity by presenting professionally, adopting an enticing pricing policy, focusing on brands and backing all this will brilliant customer service.

Right now, our stationery sales ought to be growing.  I know from the recent benchmark study that they are growing in half the newsagencies.  It is the other half I am concerned about.

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Newsagency opportunities

Optimism in the gloom

There is plenty of gloomy news out of the US overnight which relates to categories important to Australian newsagencies.

US stationery retailer Office Depot reported a sales drop of 18% last quarter.  The Wall Street Journal says this is due, in part, to newcomers in the stationery field.  Most newsagents reported a drop in stationery sales in the last quarter based on my sales benchmark study.  Those achieving growth produced excellent numbers.  Newsagents ought to be growing in stationery in the marketplace as consumers pull back on their visits to the bigger outlets where they know they will buy more.  The WSJ article is interesting in this regard.

American Greetings (owner of John Sands) reported a 14% fall in sales for the quarter.  The tough US conditions are making people think twice about card purchases according to a Forbes.   Cards are another tough category.  Some newsagents do very well with cards while others are experiencing poor results.  The key appears to be direct engagement.  Newsagent who ‘own’ their card department are more likely to produce better results based on the data I am seeing.  Our small businesses are more able to respond to conditions than the nationals.

Time Warner has reported a sharper decline in magazine advertising revenue than forecast.  We are seeing this here.  There was mention in the Australian Financial Review yesterday of this impacting PMP results.  If advertising revenue continues to fall through the year we will feel an impact in newsagencies on several fronts.

While these reports read like bad news.  They ought to encourage us to exert more control over our businesses, to be more versatile and be on the move. I am meeting more newsagents bucking the trend and producing good results be refusing to let stuff happen around them.  They are cutting their own path, taking risks and, often, enjoying good success.  For example, one newsagent cut 30% of magazine space and increased overall magazine sales.  Another went from three card companies to one and increased sales.  Another got on his bike and chased stationery business outside his four walls and trebled stationery sales in six months.

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Newsagency challenges

The newsagency community connection

When speaking at newsagent conferences and workshops over the last two years I have asked what do we stand for?  A common answer from newsagents was community connection, being local.

Being connected with the local community is a good unique selling proposition when most of what we sell in our newsagencies is available from other businesses, usually bigger than ours. By trading off the local connection we connect with others who are community-minded. But I wonder how locally connected we really are.

I know that in my own businesses we could do more – and I guess this is what started me thinking about this topic. I want the local connection to be real for us and for our customers.

My question for newsagents this morning is whether we are as community minded as we think? Is the connection more in our heads than our actions?

I started thinking about this over the weekend when researching how some businesses in small UK and US towns connect with their communities.
Here are some questions you could ask yourself to test your community connection:

  • What local charities does the business support?
  • What local schools does the business support?
  • What local organisations is the business connected with?
  • What local events does the business actively participate in?
  • Have you compared the savings of shopping locally at your business compared to further away? Do you communicate this?
  • Do you buy from local businesses where possible? Do you promote this?
  • Do you promote your business with other local businesses?
  • Does a representative of the business attend events and charities supported by the business to make awards?
  • Do you hold events in the newsagency for local groups – art shows, competition entries and the like?
  • Do you participate in local council business forums?
  • Are your employees encouraged to share in your community involvement?
  • Are you part of the local traders association?
  • Are local organisations able to publicise events in the window or using other resources of the business?

I suspect there is a big difference between the community connection of a newsagencies in the city compared to the country. I’d be interested in what others think.

Given the resources in our businesses, there are initiatives we could take to help the local community and build our connection.  Here are a few:

  • Establish a what’s on noticeboard in your window or on a wall.
  • Sponsor a locally focused newsletter.
  • Link to local clubs and groups on your website.
  • Check our the government community portal.  It has opportunities in many communities.
  • Talk to your local council – they are bound to have suggestions on ways you can connect with the local community.
  • Create a local traders website.
  • Collect change from customers for local charities.
  • Create a newcomer pack with other businesses and deliver this to families new to the area.
  • Sponsor an annual award encouragement award at a local school and present the award yourself.
  • Support at least one local sports club.
  • Price compare popular items in your shop with bigger businesses further away.  Promote your point of difference.

IGA has an excellent presentation online about their community involvement.

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Customer Service

VANA quits Futures Project

VANA announced today that it is quitting its Futures Project.  Regulars here will know that I have been a critic of this project from the outset.  It is one of the reasons I resigned from VANA in February.

VANA has an excellent opportunity to refocus on being an association.  Now, more than ever, newsagents need strong representation on policy and supplier issues.

Congratulations to the VANA Board for making this decision.

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Newsagency opportunities

State newsagent associations granted collective bargaining right

Newsagents have been granted collective bargaining rights by the ACCC.  The QNF, NANA and VANA, state associations representing newsagents in Queensland, New South Wales and the ACT and Victoria have been granted the right to represent newsagents in this.  This is an initiative started by the QNF and NANA.  Congratulations to them for pursuing this for newsagents.

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Newsagency opportunities

The monopoly is over

“Now the consumers have taken charge — they decide what news is,” Osborne said. “Monopoly power vanished. The existence of a competitive marketplace is permanent. And we should have known and we should have anticipated that.”

This is former Dallas Morning News publisher Burl Osborne speaking at a newspaper editors convention on the weekend.  This speaks to our channel as much as it speaks to newspaper publishers.

Osboorne’s speech reminds us that we need to compete, on all levels – with other newsagents and indeed anyone offering products and services which compete with our business.

Our channel was established with monoply as a core point of difference in the 1800s.  That ended years ago.

Not enough newsagents have embraced the opportunity of competition.

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Competition

Respecting Anzac Day

anzac_photo.jpgMichael from Crestwood News is honouring his Great Grandfather and acknowledging Anzac Day with this photo on display at the counter this morning.  While publishers require newsagents to be open today, some customers see this as being disrespectful.  By placing the photo at the counter, Michael is identifying with the day and providing an opportunity for sharing his family story.

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Newsagency opportunities

Ashton Kutcher has 1 million followers on Twitter

Twitter is the social website of the year.  The latest race for followers in proof of that.  Kutcher was in a race with CNN to get to 1 million followers.  The interest in this story is evidenced by the 1,500 news items accessible through Google about the race.  Kutcher’s victory was announced by Oprah Winfrey on her TV show.  On a side issue – MTV has a story asking whether Oprah joining the Twitter community is a tipping point to the end for Twitter.

Ashton Kutcher on Twitter Magazine was launched yesterday on Ulitzer. This is an online magazine offering live news and comments on Kutcher’s Twitter journey. At the Ulitzer page you can subscribe to updates for free.

CNN refers to Twitter regularly on its programs and is hailed as a pioneer in mainstream media on the use of Twitter.

The amazing growth of Twitter this year is relevant to newsagents because it reflects a significant shift in how gen x and gen y receive and pass on news and other information.  Celebrities are embracing Twitter at a phenomenal rate.  By tweeting on Twitter they are able to cut out middlemen and control more of their story. From a media company perspective, such as CNN, it is another distribution channel for content.  In the US, content is delivered free by mobile phone.  Here in Australia, you need a special app for your iPhone to get this.

I am not sure how we can use Twitter in our newsagencies. It could be a channel for promoting special deals.  It could also be how we pass on story headlines to encourage people into the shop to buy a magazine – but that feels like a poor idea to me.  One thing is for certain, if any newsagent does use Twitter, tweets need to be relevant to the newsagency – otherwise what is the commercial value?

Can we ignore Twitter?  No!  Our businesses were founded on being a news and information distribution channel.  Twitter is a news and information distribution channel.  The success of the race between Kutcher and CNN is a reminder that the core of our business model is changing.  We need to embrace that.  It is a terrific opportunity.

I have been a Twitter user since January 2008.  I joined to see what was happening and to use it to publish anything I thought was newsworthy. How Twitter is used has changed significantly since then.

For those who don’t know much about Kutcher, he is an American actor, married to Demi Moore, creator and host of TV show Punk’d and star of a bunch of flms including Dude, Where’s My Car?, Just Married, The Butterfly Effect and The Guardian. He is also the co-creator of several other successful TV shows.

For more about Twitter, go to Wikipedia – also check out their definition for a Tweet.

LATER:  Folio magazine reports that talk of Twitter and other social media sites dominated the Magazine Day conference held in News York this past week.

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Media disruption

Newsagents enjoying success with stationery

I have been talking this week with some newsagents who participated in the recent sales benchmark study and in particular about their success with stationery.

54% of newsagents particpating in the study reported growth in stationery sales between January and March this year compared to the same period in 2008 – with the average increase in revenue reported as 7%.

When you are talking about upwards of $50,000 in stationery for the quarter the increase is quite valuable, significant in a tough marketplace.  I wanted to understand how some of these newsagents achieved such good numbers. Their feedback on why they have been successful with stationery can be distilled to three points:

  • Keep the stationery offer fresh.  Change displays regularly.  Keep product clean.  Quit old stock.
  • Be brand conscious.  Customers like brands they know.  Stock brands which are promoted regularly.
  • Work the department.  Train staff to engage with customers and to guide their decisions. This engagement, based on good product knowledge, is a key point of difference over supermarkets and Officeworks.

Stationery is hard work.  But the rewards are worth it – more than twice the margin for newspapers and magazines.  If we buy well we can establish a significant local point of difference.  I saw this first hand last weekend in a newsagency which dominates the town for stationery.  This is not just a country town opportunity, we can be the 7-eleven of stationery if we are smart.  Newsagents reporting growth this year are doing this now.

One of the reasons I do the benchmark studies is to show that there are newsagents driving excellent success – in the hope that this encourages others to engage more deeply with their business.

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Newsagency opportunities

Correlation between cards and gifts

I have been digging further into the January – March 2009 newsagent sales benchmark study data over the last few days and have evidence which demonstrates a correlation between gift sales and card sales in newsagencies.  Newsagents with a strong gift offering, $2,000 a month in sales or more, derive a benefit in greeting card sales. These newsagencies have out performed other newsagencies, where there is no significant gift offer, in the January – March 2009 versus 2008 comparison.

While gifts is a hard category to get right, those who have certainly benefit elsewhere in their business.  Newsagents successful in gifts I have spoken with tell me that it tookthree years or more to develop the knowledge necessary to be consistently successful with gifts.

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Gifts

Publishers offer to replace Alpha magazine

Several publishers are offering to replace the prime position occupied by Alpha magazine – next to newspapers in newsagencies.  This follows the move by News Ltd to cut newsagent margin on Alpha by 40%.  It will be interesting to see if newsagents have the guts to move Alpha and if they do, the impact on Alpha sales.

Publishers interested in proposing such a move should make contact through newsagency marketing groups as they have the best mechanisms of compliance.

My opinion is that Alpha should be moved away from its prime position immediately.  This prime space must be preserved for titles from which we receive premium margin and for which we have publisher commitment to respect our support in building success for a title.  Alpha is an opportunity for us to show how we feel about supplier decisions which harm our businesses.

Unfortunately, I suspect that newsagents will not move Alpha from its prime location – in part because of fear of retribution from News Ltd. and in part because of ignorance.

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magazines

Understanding the Amazon Kindle challenge

kindle2_05-440x266.jpgSal Cangeloso has written an excellent review of the Amazon Kindle at Geek.com. It was accompanied by the photo which I have included here to show how the size of the Kindle compared to a book.  The Kindle is not currently available in Australia and Amazon appears to be in no hurry to release it here.  It’s lack of availability is another reason Australia is behind the United States when it comes to print book sales compared to digital book sales – or in front depending on your perspective.

The Kindle is used to read books, magazines and newspapers.  It collects content through a wireless network connection – anywhere in the United States.

When the Kindle and similar devices are released here, disruption to print media will gain pace.  The Kindle rests the distribution channel for publishers.  This is why newsagents need to be aware of it and other disruptive technologies.  From my first post about the Kindle in November 2007, I have considered this to represent a serious challenge to our model.  Australian newsagents were created, after all, solely for the purpose of distributing print media products.

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Media disruption

Magazine sales fall 10% in newsagencies in Q1 2009

A benchmark study of sales data from 97 newsagencies, comparing sales between January and March 2009 with the same period a year earlier, has revealed a 10% fall in magazine sales in newsagencies. The benchmark study has also revealed better than expected sales results for newspapers, growth for greeting cards and reasonable growth for stationery.

The benchmark study uncovered excellent success stories for many newsagents – demonstrating that many in this retail channel are pursuing change and benefiting as a result of this effort.  It also highlights that a concerning number of newsagents are yet to embrace the opportunity of change.

I have been pouring over data from participating newsagents for a week.  It is a long process because for the different ways newsagents record sales in some departments.  I am grateful to the newsagents who trusted me and provided access to confidential business performance data.  I am privileged to have this and the insights it is helping me form.

This benchmark study is part of an on-going project which tracks sales in newsagencies and provides the information for newsagents and others to access and consider.

More detailed store by store comparisons are available to participants in the study.  I have a presentation I am putting together for some suppliers and others to brief them on the state of the channel.

This benchmark project is another way Tower Systems helps all newsagents.

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Newsagency opportunities

Newsagents featured in Mediaweek article

meadiweek.jpgMediaweek this week publishes an interview with me about the newsagency channel and how I came to be involved.  Click here to see a full copy.  I appreciate the time James Manning took to understand some of the challenges newsagents face and the complexities of our business model.

Given the readership of Mediaweek, hopefully the article will facilitate a greater understanding of why we newsagents act as we do on some issues.

Our best asset is our network of retail outlets yet it is our most misunderstood and underutilised asset.  The Mediaweek article puts this opportunity on the table again.  Hopefully, publishers and other suppliers engage.

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magazine distribution

The future of newspapers

Jon Faine moderated an excellent discussion yesterday morning on local ABC radio in Melbourne on the future of newspapers.  I found the discussion between Michael Gawenda (former editor of The Age), Eric Beecher (former editor of the Sydney Morning Herald) and Sally Warhaft (editor of The Monthly) to be most interesting.  They covered disruption brought about by the Internet as well as challenged brought about by the current economic situation.

I hope they load the discussion to their website as I am sure many newsagents would find it interesting – our channel gets a fleeting mention from Eric Beecher.

A conversation for another day could be about the challenges faced by businesses and professions built around newspapers. Look at newsagencies.  Our channel was createdby a publisher in the 1800s on the goldfields of Victoria.  We have been servants ever since.  We are struggling to contemplate life out of service.

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Media disruption
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